Last month it was AXA Asia Pacific wondering about the next year or two and how tough it would be for investors and the markets. Yesterday it was the turn of the AMP to look to the next year or so.
Like AXA, the AMP found that conditions would be tough.
AXA said the outlook cast doubt on its strategy to double itself by 2011 under its current strategic plan.
The AMP told shareholders that market conditions were tough and it was working on the assumption those conditions will continue into 2010.
In fact the absence of any mention of current trading for the AMP in the official speeches to yesterday’s AGM, should give investors reason to be suspicious.
The comments about 2010 also indicates the company has written off 2009, or so it would seem.
Chairman Peter Mason has told the group’s annual general meeting that even though stock markets had picked up in the past couple of months, the downturn still had a way to go.
"Market conditions in 2009 are tough and we are working on the basis that this will remain the case into 2010, and perhaps beyond,’ he said in his speech.
"Even though stock markets have picked up over the past couple of months, the economic recession has a long way to go."
"There is a global financial crisis. The financial system worldwide is in turmoil. Stock markets are down substantially.
"Credit markets remain in disarray. Property values are falling and the property market is illiquid. Dividends are being cut.
"In these unprecedented times, governments have had to take unprecedented steps to intervene and the longer-term ramifications of these interventions are uncertain, both for the financial system and the global economy.
"Economies everywhere are in recession. In Australia and New Zealand, unemployment is rising.
"In Australia, the government, to protect our financial system, extended guarantees to all banks, creating significant changes to the way our markets operate, to the pricing and availability of debt, and to the competitive landscape," Mr Mason told the meeting.
"Our focus on preserving capital meant that we moved quickly – ahead of many other companies – to raise in excess of A$550m of equity in November last year. This was a precautionary move, to ensure the financial strength of AMP through turbulent times.
"The rising cost and scarcity of debt funding also prompted us to offer a new retail debt security, AMP Notes, in March this year.
"We have also taken the very difficult step of reducing the final dividend payment, from 22c a share in 2008, to 16c a share.
“We understand the importance of dividend payments to our extensive shareholder base, particularly when times are tough.
“In the end, however, we determined that reducing our dividend payment was an important factor in maintaining our balance sheet strength.
"The outcome of these actions was that at the end of March, AMP had in excess of A$900 million in surplus capital above the minimum regulatory requirement. This is a solid position for AMP.
"Reducing costs has also been a priority. That has meant taking some painful decisions to change roles and to reduce staff numbers in the organisation.
"This is always a last resort and we are exploring a range of options within the company to keep our costs down while still employing as many people as we can.
"We have already instituted a salary freeze at the executive and senior manager level and introduced a 19-day month – that is, one unpaid day off each month – in our investment management business."
Mr Mason said AMP was also preparing for significant changes in the superannuation industry in the next few years due to new policies and regulation and consumer demand.
"As we work to preserve capital and control costs, we are also preparing the company for some significant changes that are likely to lie ahead," he said.
"There are a number of government reviews underway, or flagged to begin soon, that are likely to result in recommendations for changes in the financial services industry, and particularly in the superannuation."
Australia has one of the largest private pensions markets in the world, worth over $1 trillion and is projected to grow by 12% a year for the next 10 years.
"The size and liquidity of our superannuation market has enabled Australia to lead the world in the amount of new equity raised from global share markets over the past six months, to recapitalise financial and industrial companies," Mr Mason said.
"So, as you would expect, we have been in constant dialogue with the federal government since its election, to understand its views on superannuation and investment policy, and how it would like the industry to evolve."
Mr Mason said AMP could not pre-empt the outcome of any of the reviews underway or about to start.
But it was well aware of the government’s viewpoint on a number of issues and was moving to anticipate change.
"Against this background, we retain a very positive view of the long-term attractiveness of the Australian superannuation market, and we are well positioned to capitalise on the changes we see coming," he added.
Unfortunately there was no mention in Mr Mason’s speech, or that of CEO, Craig Dunn of how the AMP was currently trading. That’s despite the company being over four months into its trading year.
AMP shares were down 11c to $5.14.
